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The Merkers Treasure

Nazi gold---the words crackle with an electrifying terror like a bolt of lightning slicing through the sky. No two words are more liable to trigger images of Nazi intrigue and brutality. Unfortunately, there are as many false tales of Nazi loot, as there are true. No single aspect of WWII has caused more controversy, more myths, and more bewilderment. Even after over fifty years since the end of the war a sea of controversy still remains. Equally important, but seldom mentioned, is the hoard of loot collected by the Emperor of Japan. Both hoards contained enormous quantities of gold, silver, platinum, jewels, art, and other valuables looted from a third of the world.

The other reason adding to the controversy is the extreme complexity of the subject. An all-encompassing view of Nazi gold is nearly impossible as it involves the Vatican, the Swiss banks, South American banks, the Bank of England, the Federal Reserve, the Nazis plans for a rebirth. Additionally top Nazi officials skimmed some of the gold and valuables into individual hoards. Moreover, the allies never reported all the gold they recovered and what the Soviet Union recovered remained hidden behind the Iron Curtain and is only now becoming known. How much of the treasure has been recovered is largely a game of guessing, as the bitterly disputed estimates vary widely. The only certainty surrounding the hoard is that much of it remains unaccounted for. Moreover, much of the wealth was most likely spent rebuilding Germany after the war. The wealth seized from the victims of the Nazis funded at least partially the so-called European miracle in rebuilding Europe following the war.

The Nazis had precise plans for a comeback; these plans rested on their ability to conceal their ill-gotten loot from the allies. Some of the hoard had been squirreled away safely in secret Swiss bank accounts. Other portions were shipped to South America (primarily to Argentina) for safekeeping. One of the conduits to Argentina was under the control and direction of Martin Bormann.

Probably no other Nazi has more words written about him than Martin Bormann does. His fate has only recently been determined. However, the valuables that he shipped to Argentina in his project Action Feuerland are still clouded in a fog of mystery and intrigue.

There are several accounts about the fate of Bormann some plausible others bordering on the preposterous. The more common and believable account had Bormann reaching South America and living out his life there.

An equally likely account has Bormann dying during the last days of the Third Reich while trying to escape from Berlin. In a third account Bormann escaped to the Soviet Union and lived out his life there. General Gehlen started this account. He claimed to have recognized Bormann in a crowd at a soccer game as the television camera panned the spectators. Lately, two ridiculous accounts have emerged. One named Bormann as a Soviet mole inside Hitler’s inner circle. The other claimed that a British commando unit rescued Bormann from Berlin in order to recover the Nazi treasure. He then lived out his life in the English countryside.

Obviously, it would have been advantageous for Bormann to be declared killed in Berlin if he had survived. Nevertheless, recent DNA taken from one of the skulls found in Berlin matched closely to an uncle of Bormann. The skull still had glass shards between the teeth. If this evidence were indeed correct, it would suggest that Bormann being unable to escape from Berlin committed suicide.

Before DNA testing was available, considerable controversy over the identity of the skull existed. In fact, the skull was caked with red volcanic clay not found in the soil around Berlin but closely matching the soil of Paraguay. Nevertheless, the government turned the remains over to the family which had the remains cremated and the ashes scattered at sea hoping to settle the controversy for all-time.

Moreover, there were credible sightings of Bormann in South America until the 1960s. Considering the skull was caked with red clay; it appears that Bormann died in South America and later his body moved to Berlin. That view would be much more likely than believing he died in Berlin. There are hundreds of creditable reports since the end of the war until the 1960s of sightings of Bormann at various locations in Europe and later in South America. Believing Bormann died in Berlin requires discrediting all of these reports. Thus his ultimate fate is still unknown and clouded in a sea of controversy.

However, the ultimate fate of Bormann is of only secondary importance. What is of more concern is the fate of the assets he spirited out of Germany to Argentina. Two of the best books covering Bormann and South America are Aftermath by Ladislas Farago and Martin Bormann: Nazi In Exile by Paul Manning. Both have been discredited to some degree. Manning was a reporter during WWII and has written two books on WWII that are regarded as classics. Manning admits that Allen Dulles deceived him in regards to South America. The question then remains why Dulles would deliberately deceive the author. As we shall see later in the following chapters Allen Dulles had a lot to hide.

While the Nazis had concrete plans to ship much of their gold and valuables to other countries, the United States had plans to recover these valuables. A good deal of the American effort to recover the Nazi gold fell under Operation Safehaven. However, no one realized the enormous size and complexity of the task until early April 1945. Late in the evening of March 22, 1945, elements of Lt. Gen. George Patton’s Third Army crossed the Rhine. What at first was a trickle of soldiers crossing the Rhine soon turned into a raging flood of troops.

By noon on April 4, the Third Army had captured the village of Merkers. During the 4th and 5th of April a detachment of CIC (counterintelligence unit) questioned displaced persons in the vicinity. Many of these displaced persons told the CIC that unusual activity had been observed around the Wintershal AG’s Kaiseroda potassium mine at Merkers. Further, these rumors suggested the Reichsbank had hidden its gold reserves there. The information was passed up to G2 and they immediately issued an order to exclude civilians from the area.

At a roadblock the following morning, two female displaced persons approached the roadblock and questioned by the guards. One was pregnant and on the way to Keiselbach to see a midwife. Guards at the roadblock then drove the two women back to Merkers. On entering Merkers the jeep driver asked the women what type of mine Kaiseroda was. They told him it was where the Nazis had hidden their gold and other valuables.

By noon on April 6, this information had reached Lt. Col. William A. Russell. He proceeded to Merkers and questioned several displaced civilians who confirmed the story. Additionally, Russell learned that Dr. Paul Ortwin Rave, curator of the German State Museum in Berlin as well an assistant director of the National Galleries in Berlin, was present to care for the paintings. Russell then confronted the mine officials with the information. He also questioned Werner Veick, the head cashier of the Reichsbank's Foreign Notes Department who was also at the mine. Rave admitted to his role of caring for the paintings. Veick told Russell the entire gold reserve of the Reichsbank was hidden in the mine.

The military wires were now blazing with requests for reinforcements to guard the mine. At first Russell requested the 712th Tank Battalion be ordered to proceed to Merkers to guard the entrances to the mine. The Ninetieth Division Military Police provided additional forces to guard the mine entrances. By evening, five more possible entrances to the mine were discovered and that one tank battalion was not sufficient to guard all entrances. Maj. Gen. Herbert L. Earnest then ordered the First Battalion of the 357th Infantry Regiment to proceed to Merkers and reinforce the 712th. Russell also informed an XII corps G5 officer of what was going on at the mine.

On the morning of April 7th additional entrances to the mine were located. Guards were placed at each of the additional entrances. At 10 AM, Russell and two other officers along with Rave and mine officials entered the main entrance. The main shaft took them 2200 feet below the surface. In the main tunnel they found 550 sacks of Reichsmarks. Further down the tunnel they found the main vault. The vault was behind a three-foot thick brick wall and enclosed an area at least 100 feet wide. In the center was a heavy bank vault door.

Patton was informed the mine had been entered and a large quantity of Reichsmarks found, but no gold. As Patton’s forces continued their lightning advance into Germany, Patton ordered the 357th Infantry Regiment except for the First Battalion, to move out and join the Ninetieth Infantry Division. Patton also ordered the door to the vault to be blown open.

Early on April 8, Russell, accompanied by a public affairs officer, photographers, reporters, and elements of the 282nd Engineer Combat Battalion, reentered the mine. The door was easily blown open. They entered what was termed Room 8. The size of the hoard was simply stunning. Stretched before them was a room about 75 feet wide and 150 feet long. The room was lighted but not ventilated.

Lying before them were over seven thousand bags, stretching all the way to the back of the room. The bags were laid out in twenty neat rows about knee-high and separated by roughly two and a half feet. All the bags were marked. Along one side of the room they found bailed currency stacked. At the back of the room were 18 bags and 189 suitcases, trunks and boxes; each carefully marked. Each label was marked with the name Melmer. It was obvious that these containers belonged to the SS. It was also the first clue to the complexity and scope of the Nazi looting of Europe.

Some of the seals on the bags were broken so the stash could be inventoried. The inventory revealed there were 8,198 bars of gold bullion; 55 boxes of crated gold bullion; hundreds of bags of gold items; over 1,300 bags of gold Reichsmarks, British gold pounds, and French gold francs; 711 bags of American twenty-dollar gold pieces; hundreds of bags of gold and silver coins; hundreds of bags of foreign currency; 9 bags of valuable coins; 2,380 bags and 1,300 boxes of Reichsmarks (2.76 billion Reichsmarks); 20 silver bars; 40 bags containing silver bars; 63 boxes and 55 bags of silver plate; 1 bag containing six platinum bars; and 110 bags from various countries.1 In other tunnels a large quantity of artwork was found. The hoard also revealed the brutality of the Nazi regime. Included in the inventory were bags of gold fillings in teeth containing gold fillings extracted from the victims of the concentration camps.

Once aware of the enormous size of the hoard, Patton considered the matter to be political and immediately requested that it be turned over to SHAEF. Eisenhower appointed Colonel Bernard D. Bernstein, deputy chief, Financial Branch, G-5 Division of SHAEF. On April 15, a convoy with constant overhead fighter protection moved the treasure to the Reichsbank in Frankfurt.

By mid August, the gold had been weighted and appraised. The gold was valued at 262,213,000 dollars. The silver was valued at 270,469 dollars. Additionally, a ton of platinum and eight bags of rare coins had not been appraised. Early in 1946, the gold was turned over to Inter-Allied Reparation Agency and eventually turned over to the Tripartite Commission for the Restitution of Monetary Gold. The Tripartite Commission returned the gold to the central banks of the countries it was looted from as soon as possible. However, due to the Cold War, some of the gold was not distributed until 1996.

The distribution of the Merkers gold, however, is not without controversy.

No account was taken of how much of the gold recovered was from the smelting of dental gold. Interesting enough, the army microfilmed the records of the Reichsbank's Precious Metals Department in 1948. These records were turned over to Albert Thoms, who was working for the successor bank to the Reichsbank. These records have since disappeared in Germany and were not relocated until the 1990s.

No other cache of gold and valuables was found in Europe to rival the size of the Merkers find. Although one of the caches of the Golden Lily, the Japanese Emperor’s looted treasure, reportedly unearthed by Marcos in the Philippines was larger. The only other possible cache from Europe that could rival the Mercers find would be the Ustashis’. However, the gold and valuables looted by the Ustashis has never been located and the best evidence suggests that it was smuggled out of Europe through the Vatican-CIA ratline. How much of the Ustashi’s cache made it into the Vatican vaults is still shrouded in secrecy and mystery. Several other smaller caches were located, mostly in the alpine region of Austria, where the Nazis tried to stage a final last stand.

There is no controversy about what the Merkers treasure contained. That is known with certainty. The controversy stems from where the gold came from and how it was distributed. Moreover, another controversy abounds about what extent the Merkers hoard was of the total Nazi treasure.

In order to reach an estimate about the extent of the Nazi looting the gold reserves of the Nazi’s trading partners can be used to set an upper bound. Only a handful of countries hiding under the umbrella of neutrality continued to trade with the Nazis during the war. The table below reflects the change in gold reserves of Nazi Germany’s primary trading partners. The figures are in millions of dollars.

Country

1939 reserves

1943 Reserves

Increase

Spain

42

104

62

Sweden

160

456

294

Turkey

88

221

234

Portugal

79.5

447.1 (1945)

367.6

Switzerland

503

1040

537

Obviously, not all the increase can be attributed to the Nazis. However, the figures do set an upper limit. Further, since the only currencies not accepted globally were the German Mark, Italian Lira, and Japan Yen, the neutral countries continued to accept the US dollar and British pound. Additional evidence comes from the declared deposits of Swiss banks which had soared from Swiss Franc (SF) 332 million in 1941 to SF 846 million in 1945. Again not all the increase in deposits cannot be attributed to the Nazis but it does set an upper limit of half a billion dollars.

The figures above compare favorably with the latest estimates available. The latest evidence stemming from President Clinton’s initiative reports the Swiss received $440 million dollars in gold from the Nazis, of which $316 million dollars was looted. Additionally the report from Clinton’s initiative shows that one million dollars of gold was transferred to the Dresdner Bank and the Deutsche Bank; both banks were private commercial banks. These banks then sold the gold in Turkey for foreign currency. The report continues that over $300 million dollars in Nazi gold reached Portugal, Sweden, Spain, and Turkey.

The Foreign Office conducted a vigorous campaign warning neutral countries about accepting gold from the Nazis. The United States Department refused to support the measure until July 1943, when the alarming increase of gold reserves of the neutral countries became apparent. Even then the support from the State Department was at best cool.

The countries listed above are not mere accidents. Without the raw materials supplied by Sweden, Spain, Portugal, and Turkey, the Nazis would not have been able to conduct war. Sweden supplied vitally needed high-grade iron ore. Turkey supplied Hitler with chromate. Portugal and Spain supplied wolfram. All three metals were needed to produce war munitions and heavy armor. Chromates were used to harden steal for armor while wolfram or tungsten was used primary in machine tools. Nazi sources for both metals were extremely limited and they were forced to rely almost one hundred percent on these countries.

Considering South America was a prime refuge for the Nazis after the war it is instructive to look at changes of the gold reserves of South American countries, particularly Argentina. Argentina’s gold reserves increased from 313.83 metric tons in 1940 to 1064 tons in 1945. The increase in the gold reserves of Argentina in terms of dollars, was a whooping $635,000,000 dollars. To put that figure in perspective the U.S. budget for 1940 was approximately $9.4 billion dollars. Brazil also saw an increase in gold reserves from 45 metric tons in 1940 to 314 tons in 1945, or an increase of about $228,000,000 dollars.

The above reserve figures shed some light on the destination of some of the Nazis’ loot. How much of the increase in South American gold reserves came from Germany near the end of the war to finance the Nazis’ planned comeback is still unknown. However, gold was only one small part of the Nazis’ comeback plan. Even more valuable to the Nazis’ plan were the amounts of bearer stocks, bonds and the number of Nazi front corporations established worldwide by Bormann. These corporations held valuable patents and would produce a steady income stream to finance the Nazi underground.